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Yuhas v. Allis-chalmers Dist. Serv. Corp.

JUNE 11, 1973.

DOROTHY YUHAS, PLAINTIFF-APPELLANT,

v.

ALLIS-CHALMERS DISTRIBUTION SERVICE CORPORATION ET AL., DEFENDANTS-APPELLEES — (WILLIAM CREIGHTON, DEFENDANT.)



APPEAL from the Circuit Court of Cook County; the Hon. DAVID A. CANEL, Judge, presiding.

MR. JUSTICE HALLETT DELIVERED THE OPINION OF THE COURT:

The plaintiff sued three Allis-Chalmers corporations (hereinafter collectively called Allis-Chalmers) and William Creighton, its local dealer, for injuries sustained by her during an attempt by him to remove certain keys from the ignition of an Allis-Chalmers crawler tractor on which she was physically located. The trial court after a pre-trial settlement conference, during which the court indicated a settlement figure which was not acceptable to the plaintiff, entered summary judgment for Allis-Chalmers on the ground that it was not responsible for Creighton's actions and then, there remaining no Cook County defendants, transferred the case to LaSalle County where he resides. This appeal is from both orders.

The amended complaint alleged in substance that on August 31, 1967, Creighton wilfully or, in the alternative, negligently, injured the plaintiff during the course of an effort by him to remove certain keys from the ignition of a Caterpillar tractor on which the plaintiff was then physically located, and that Creighton, in that effort, was the agent, servant or employee of Allis-Chalmers. Its motion for summary judgment challenged its responsibility for his actions.

The discovery depositions of William Creighton, the dealer defendant, and Clinton Peters, the defendant Allis-Chalmers' District Representative, were taken and filed.

Peters testified, in substance, as follows:

He had been employed by the Allis-Chalmers Manufacturing Company for fourteen years as district manager. His duties consisted of: (1) calling upon dealers; (2) stocking dealers; (3) assisting dealers with sales; (4) collecting money from dealers for merchandise sold. He also assisted the dealer in writing up contracts, financing statements and in the computation of payment schedules. As to collection of payments, he collected from the dealer and only dealt with the purchaser through the dealer. His territory consisted mostly of LaSalle County and he had seven dealers in his area.

William Creighton was a dealer in Leland, Illinois. He was a dealer, not a distributor. Creighton owned his own business in Leland, Illinois, as an individual, and he sold Allis-Chalmers equipment and also New Holland equipment.

Peters had no authority over Creighton but he supervised the dealers in his area and made recommendations to them to lead them to a more profitable business. He assisted them in making sales.

He did get involved with the collection of overdue payments. He would get notices from the Peoria Branch of Allis-Chalmers of payments which were past due. The dealer would also get a copy of this notice. He would put this notice in his dealer's file which was located in his own briefcase and, the next time he called on the dealer, he would bring it to the dealer's attention to see what action the dealer had taken. Sometimes he and the dealer would call on a customer together. If payment was not made, repossession of the equipment might occur. He would assist in repossession. He had no authority to request a dealer, such as Creighton, to repossess a piece of equipment. He could ask to use the dealer's equipment (such as a truck) to bring the equipment in.

If the dealer became "insecure," he could demand full payment from the customer. A dealer's insecurity could result from the condition of the machine, payment, or the manner in which the machine was being used. Allis-Chalmers could repossess a piece of equipment if it felt insecure. They became insecure in this case, but he did not know of any effort, on Allis-Chalmers' part, to repossess the crawler tractor involved in this case. In this case, it was up to him to repossess since the "paper" covering the sale of this machine had been sold to Allis-Chalmers.

The dealer has a contract with Allis-Chalmers called a Dealer's Sales and Service Agreement. Allis-Chalmers can cease and desist from doing business with a dealer if the dealer violates the contract. If a dealer doesn't produce, Allis-Chalmers can go to a neighboring area and set up another dealership which will cut into the former dealer's business.

He knows Robert Smith, the purchaser of the crawler tractor involved in this case. He met him at Creighton's store in Leland, Illinois. Mr. Smith wanted to buy a crawler tractor. Eventually, the crawler tractor was sold to Mr. Smith. Mr. Peters assisted in drawing up the purchase agreement and the dealer's purchase order. The dealer's purchase order is the original agreement between the dealer and the customer with regard to the type of equipment to be sold.

A schedule of payments was worked out between Mr. Peters, Mr. Creighton and Mr. Smith. Mr. Smith was to make the payments directly to Allis-Chalmers in Morton, Illinois. This crawler tractor was financed through Allis-Chalmers. When the sale is made, the dealer normally gets one of three things: (1) cash; (2) a trade-in; or (3) a contract. The dealer sells the contract to Allis-Chalmers. The dealer signs a guarantee on such transactions. He guarantees payment by agreeing to repurchase the machinery if there is a default in payment.

If, in this case, Mr. Smith did not make payment, then Mr. Creighton, by virtue of his signed contract with recourse, would have to "pick up the tab". In this case, Creighton, as part of his contract with Allis-Chalmers, agreed to service the product through the warranty period of six months.

The dealer receives no cash from Allis-Chalmers. This is a paper transaction. The dealer uses paper (a contract) to pay Allis-Chalmers. The dealer uses the paper to clear his inventory. A dealer such as Creighton receives income over and above the invoice cost of sale. Normally, a dealer's profit is on the trade-in. A UCC-1 form, a financing statement, was filed in LaSalle County following the sale of the crawler tractor involved in this case. The vehicle was to remain in LaSalle County. He imagines it was his responsibility to see to it that the vehicle remained in LaSalle County. He never checked on the whereabouts of this crawler tractor. He has never been told to check on a piece of equipment.

Mr. Smith first became delinquent on payment in the summer of 1971. Mr. Peters received a notice. After receiving that notice, he put the notice in his Creighton file and planned to talk this over with Mr. Creighton when he next saw him. He received a second notice of payment due on Mr. Smith approximately two weeks to a month after the first notice. It is customary to discuss delinquency with a dealer and then go with the dealer to see the customer. He and Mr. Creighton called on Mr. Smith more than once. He never ...


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